Fighting Darth Vader

Macro Man feels like he’s channelling Star Wars. Yesterday’s action was drearily predictable, with the poor GDP figure met with risk-asset buying, and the Fed non-announcement met with more risk-asset buying. Oh, sure, the Fed said that they were gonna keep rates low for an extended (Is that longer than “considerable”? – Ed.) period. Of course, the eurodollar strip steepened, so its not exactly like that was taken at face value across markets.

In any event, a number of risk-asset charts are looking pretty compelling. Spoos are currently trading well above the congestion zone around 870-875, the dollar’s broken down, and stuff like the Ozzie, after a recent period of congestion, has broken both its recent high and the3 200-day moving average (for the first time since last August.)

oz.gif

It all looks really quite bullish. So Macro Man finds himself feeling like Luke Skywalker…trying to maintain his fundamental convictions, but feeling tempted by the increasingly attractive delights of the Dark Side. While some market cheerleaders are more Jar Jar Binks than Darth Vader, a number of people whose opinion Macro Man respects are bullish.

At the same time, tomorrow brings a change of month, and with it a sharply deteriorating seasonal for equities. What’s a punter to do? Is it worth embracing a Dark Side, even just a little, while planning to revert to type at the appropriate time? Hey, even Darth Vader came around in the end….


Originally published at the Macro Man blog and reproduced here with the author’s permission.

2 Responses to "Fighting Darth Vader"

  1. Jean-Philippe Thiébaud   May 1, 2009 at 5:21 am

    Dear Luke, remain full of faith in the light side, for the stock market is currently in a bubble that is going to explode.None knows when exactly. But this is something I can feel : the optimism in the stock markets is exagerate, the market scenario at its base seems false. At least as long as the risks in the banks balance sheets remain. Don’t you see the deflation spiral begin?Bloomberg : If the earnings at Q1 were better than expected, it is because of massive job cuts. Which might trigger deflation, more pressure on wages, on prices, and so on. See the Rebecca Wilder report about that :http://www.rgemonitor.com/us-monitor/256568/got_wagesI can smell that the stress tests results were delayed because they were bad.Also remember what Warren Buffet says : Be afraid when others are brave and brave when others are afraid.

  2. Guest   May 13, 2009 at 11:24 am

    Its kinda odd, I am not in dark side or the light. I believe there are really good prices out there, and some are undervalued, so just cherry picking. Tactical.For it to bust? not to sure about that, it might shed here and there searching for that endless moving target. Its reasonable between 870-875 doesn’t sound to inflated, now last august when a recession was near now that was inflated. But everyone just acted like it was another day at the office last summer, before fall. Ironic.Like I said I am not in the dark or the light, from what I see, its just resiliency to not have to many losses. Stubborn Bulls.